Kerry Underwood

Archive for December 2019

LOVE SONG TO HEMEL HEMPSTEAD

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The following is an extract from Mike Carter’s outstanding book – All Together Now – available here

Merry Christmas to, and from, everyone in Hemel Hempstead 😊

Written by kerryunderwood

December 24, 2019 at 10:04 am

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NON-PAYMENT OF STAGE 1 COSTS TRIGGERS HIGHER FIXED COSTS

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Lysaght v Lyndon Scaffolding Limited Huddersfield County Court, 5 December 2019, Claim Number F00HD497

Huddersfield County Court held that where a matter settled in the portal process, but the defendant failed to pay Stage 1 costs on time, the claimant’s solicitors were entitled to issue Part 8 proceedings and get fixed costs pursuant to Table 6C.

I am grateful to Nicola Allen of Brearleys Solicitors for information about this case.

Written by kerryunderwood

December 23, 2019 at 9:20 am

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PART 36: OFFERS “EXCLUSIVE OF INTEREST” NOT VALID

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

King v City of London Corporation [2019] EWCA Civ 2266

the Court of Appeal, in an exhaustive analysis of Part 36, held that an offer “exclusive of interest” is not a valid Part 36 offer, and that rule applies in detailed assessment proceedings as well.

The decision to the contrary in relation to detailed assessment proceedings in

Horne v Prescot (No.1) Ltd (Rev 1) [2019] EWHC 1322 (QB)

is no longer good law.

Written by kerryunderwood

December 23, 2019 at 9:08 am

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APPEAL AGAINST PROVISIONAL ASSESSMENT LIMITED TO POINTS RAISED AT INITIAL ORAL HEARING CHALLENGING ASSESSMENT

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

PME v The Scout Association [2019] EWHC 3421 (QB)

the High Court dismissed an appeal against the decision of a Master in the Senior Court Costs Office and  held that parties wishing to challenge a provisional assessment by an Authorised Cost Officer must first request an oral hearing under CPR 47.15(7), setting out the items they wish to challenge.

Parties may subsequently appeal under CPR 47.23, by way of re-hearing, the decision made by the Authorised Cost Officer at the oral hearing in relation to those items.

However, the court confirmed that the appeal process is not an opportunity for a party to demand a re-hearing of decisions which they previously accepted and did not challenge at the oral hearing.

The judge considered the wording of CPR 47.24, the court’s powers on appeal from an Authorised Cost Officer, in particular the meaning of the obligation to “re-hear the proceedings which gave rise to the decision appealed against”.

In the judge’s view, a provisional assessment was not a “hearing”; a  “re-hearing” was a further hearing of a “hearing” that had taken place.

This was the oral hearing under CPR 47.15(7) at which a provisional assessment was challenged, and not the provisional assessment on paper.

This was in spite of the fact that Practice Direction 47.14.4(2) referred to the results of the paper provisional assessment as a “decision” and that CPR 47.21 enabled a party to appeal “against a decision” of an Authorised Cost Officer in detailed assessment proceedings.

The judge suggested that if the wording needed to be explained, the words in the Practice Direction were “infelicitously chosen” and held that a provisional assessment on paper did not give rise to a “decision” which could be the subject of an appeal.

It might better be described as provisional assessment of items on the bill which became binding on the parties if no oral hearing was requested, or if an oral hearing was requested, which gave rise to decisions capable of being appealed.

The Master also rejected the argument that an Authorised Cost Officer, cannot conduct a provisional assessment and that point was not pursued on appeal.

Written by kerryunderwood

December 20, 2019 at 3:32 pm

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HIGH COURT JUDGE SLAMS £74,000 COSTS FOR TWO-HOUR HEARING

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Weisz v Weisz & Ors [2019] EWHC 3101 (Fam)

a High Court Judge sitting in the Family Court expressed astonishment that the costs of a single application, for all of the parties, was around £74,000 in relation to a claim for a £75,000 lump sum and £8,511 a month.

 

The judge said:

 

“…It cannot be proportionate for so much money to be spent on this issue and it is very sad indeed that the parties have been unable to settle today’s application.”

 

“5. The starting point in relation to this case, having set out the provision which is sought by the claimant, is to express concern, if not astonishment, at the level of costs in relation to today’s application. The claimant’s costs – and this is just for today and not the claim overall – are just over £18,000. The costs of the third and fourth defendants, who are two of the children of the deceased, are £37,880. Remarkably, I am told that the executors of the estate do not even know what their costs of today are, and I should say that if any of the lawyers in this court appear in front of me again not knowing what their costs are for the application in front of me, I will have a lot more to say about it than I have done today; but, if I take the executors’ costs as being the same as the claimant’s (and I note that the claimant has instructed – I hope I can say this without any disrespect – much less expensive solicitors than the third and fourth defendants), then that means that the overall costs of today are in the order of £74,000.

6. That is to be set in the context of the total amount claimed today by the claimant of £75,000 in terms of the lump sum plus the £8,511 a month to which I have referred. It cannot be proportionate for so much money to be spent on this issue and it is very sad indeed that the parties have been unable to settle today’s application.”

 

Comment

It is high time that all costs in all types of work were capped for specific events.

I would have thought the maximum for any application listed, as this one was, for two hours should be £5,000.

Written by kerryunderwood

December 20, 2019 at 10:53 am

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FUNDER LIABLE TO SOLICITORS BUT WITHOUT SOLICITORS ACT 1974 PROTECTION

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Abbhi v Slade (trading as Richard Slade And Company) [2019] EWCA Civ 2175

the Court of Appeal held that an agreement by a son-in-law to give his father-in-law money to pay legal fees was not a guarantee but a primary obligation, and that he was acting as a funder and was therefore liable to the solicitors, but as he was not the client chargeable under the Solicitors Act 1974, he had none of the extensive protection which that act gives to clients.

Here, the agreement had been structured so as to limit the liability of the son-in-law under section 51 of the Senior Courts Act – that is a non-party costs liability.

As the appellant’s father-in-law could not afford to pay the legal fees it was agreed by his son-in-law, the appellant, at a meeting with the solicitor, the respondent, that the appellant would pay these.

To avoid becoming liable for any cost order arising from litigation, the appellant agreed to transfer the funds to his father-in-law for the purpose of paying legal fees as they arose.

The agreement was not put in writing.

When the appellant’s father-in-law died his estate was insolvent, and there were substantial legal fees owing to the respondent.

The appellant argued that the arrangement to pay the legal fees constituted an oral guarantee and was, therefore, unenforceable as it did not comply with the requirements of section 4 of the Statute of Frauds 1677.

The court unanimously held that the agreement was not a guarantee because it was known at the outset that the appellant’s father-in-law could not cover the fees, and the appellant would, in fact, be providing the funds.

There was never any suggestion of the appellant’s father-in-law being capable of paying the fees himself.

Therefore, the agreement constituted a primary obligation because the appellant’s obligation to pay the fees did not rely on any default by the appellant’s father-in-law.

As the agreement was a primary obligation, not a guarantee, it was valid and binding even though it was not in writing or recorded in writing or signed.

The distinction between a guarantee and an indemnity is a fine one.

The Solicitors Act 1974 needs a total re-write.

Written by kerryunderwood

December 20, 2019 at 8:29 am

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PORTALS, VULNERABLE ADULTS, HARM AND INCORRECT VALUATION

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Scott v Ministry of Justice [2019] EWHC B13 (Costs)

the Senior Courts Costs Office allowed recovery of costs on the standard, open, basis where the claim had been valued at £5,000, not put on the portal, re-valued at over the £25,000 portal limit, and settled by acceptance of the defendant’s Part 36 offer of £15,000.

The court also ruled on the meaning of “vulnerable adult” within the portal process and on the definition of “harm” in the portal.

Here the claimant, a prison officer, was injured by a prisoner.

A Claim Form was issued stating that the claimant did not expect to recover more than £5,000, but following receipt of an expert’s report three days later, and a conference with counsel, the endorsement of the value on the Claim Form was amended to in excess of £30,000.

On acceptance of the defendant’s Part 36 offer of £15,000, the defendant argued that only Employers’ Liability/Public Liability portal costs should be paid.

The claimant argued that the portal, and therefore CPR 45, did not apply as the prisoner who injured the claimant was a vulnerable adult and Paragraph 4.3(8) of EL/PL Protocol reads:

“This Protocol does not apply to a claim… for damages in relation to harm, abuse or neglect of or by children or vulnerable adults.” (My italics).

Thus, there needs to be “harm, abuse or neglect” to, or by, a vulnerable adult.

 

Harm

Here, there was no “abuse or neglect”, so the issues were whether conventional personal injury amounts to “harm” and whether a prisoner was, by definition, a vulnerable adult.

The court held that personal injury, of itself, was not “harm”.

 

“16. If that phrase had read ‘abuse, neglect or harm’ (namely, if the order of the words had been different), I would have had no hesitation in saying that the word ‘harm’ was a reference to acts or omissions that are akin to abuse or neglect. The fact that the word ‘harm’ precedes the words ‘abuse’ and ‘neglect’ makes me pause for thought, but I am not overly troubled by this as there is precedent for qualifying words following (rather than preceding) words that are qualified (see, for example, Pengelly v Bell Punch Co Ltd [1964] 1 WLR 1055). In my view, the meaning of the phrase ‘harm, abuse or neglect’ is that it means abuse, neglect or other such harm. Put otherwise, it focusses on the nature of the acts or omissions in question, not on the mere fact that a personal injury has been caused.

17. Furthermore, if it were right to say that the word ‘harm’ encompassed personal injuries per se, I would have expected it to be separated from the words ‘abuse or neglect’ by something weightier than a mere comma. This is because harm (in the sense of injuries) is fundamentally different from abuse and neglect (which are acts or omissions); by way of illustration, the phrase ‘personal injury, abuse or neglect’ reads badly and is jarring.

18. There is, however, a more fundamental problem with Mr Fletcher’s argument. If the word ‘harm’ could be read as meaning personal injuries per se, this would cause serious internal inconsistencies in the EL/PL Protocol. In particular, if Mr Fletcher’s analysis were correct, it would also apply to children (including those who bring public liability claims as a result of having sustained an injury). This would mean that any child with any personal injury (whether as a result of abuse or neglect or otherwise) would be excluded from the EL/PL Protocol. This, however, is demonstrably false, as that protocol repeatedly makes reference to children. By way of example, paragraph 6.4 states that ‘where the claimant is a child, this must be noted in the relevant section of the CNF, and paragraph 6.5 says that ‘where the claimant is a child the statement of truth may be signed by the parent or guardian’. There are similar references at paragraphs 6.16, 7.24. 7.44 and 7.53. In my view, it would make no sense at all for the EL/PL Protocol to include multiple provisions relating specifically to child claimants, only for that same protocol to disapply itself. This requires a different reading of the meaning of the word ‘harm’ to that urged upon me by Mr Fletcher.

19. As a crosscheck (and it is no more than that), I note that if Mr Fletcher’s analysis were correct, the exception created by paragraph 4.3(8) of the EL/PL Protocol would be a demographically sizeable one. It would include all claims involving children, and would potentially include claims involving the elderly (not to mention disabled people and people with mental illnesses). This could include, say, a quarter of the population. In my view, it is inherently unlikely that the exception created by paragraph 4.3(8) of the EL/PL Protocol was intended to be so broad.

 

Vulnerable Adults

The court held that the status of a person covered could change depending upon the circumstances:

 

“…a woman may well be ‘vulnerable’ for the purposes of the EL/PL Protocol if she were to bring an employers’ liability claim alleging sexual abuse within her workplace, but that same person may well not be classed as being ‘vulnerable’ if she were to bring a public liability claim against a supermarket because she slipped on a grape. Put otherwise, a person’s status may change depending on the circumstances. In this regard, I note that a context-specific approach tends to apply in other circumstances in which the court considers the phrase ‘vulnerable adult’ (see, for example, A Local Authority v (1) MA (2) NA and (3) SA [2005] EWHC 2942 at [77] and [78], per Mumby J, which deals with the use of that phrase for the purposes of the court’s inherent jurisdiction).”

 

On the facts here, the court held that the prisoner was not a vulnerable adult and therefore the EL/PL exception did not apply.

 

Valuation

The court found that the claimant had not unreasonably valued the claim and that there had been no intention to mislead the court or the defendant by initially putting the value at only £5,000 on the Claim Form.

Consequently, the costs should be assessed without reference to CPR 45, that is they should be assessed on the open, standard, basis and not on the fixed costs or portal basis.

Written by kerryunderwood

December 18, 2019 at 7:24 am

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PART 36: HIGH COURT AWARDS 10% ABOVE BASE

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Essex County Council & Ors v Davies & Ors [2019] EWHC 3443 (QB)

the Queen’s Bench Division of the High Court upheld the trial judge’s decision to award interest at 10% above base rate where the claimant had beaten its own Part 36 offer.

This follows the very recent decision of the Technology and Construction Court, part of the High Court, in

Kivells Ltd v Torridge District Council [2019] EWHC 3210 (TCC)

where it stated that 8% was generally the appropriate interest rate in such circumstances.

In this case the High Court upheld the trial judge’s finding that there were special circumstances involving the defendants’ conduct which warranted the maximum rate.

The details of the Kivells case, please see my blog

PART 36: 8% APPROPRIATE INTEREST RATE SAYS HIGH COURT .

Written by kerryunderwood

December 17, 2019 at 2:48 pm

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TRIAL FEE PAID LATE – TRIAL SHOULD STILL GO AHEAD

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Badejo v Cranston [2019] EWHC 3343 (Ch)

the Chancery Division of the High Court allowed an appeal and granted relief from sanctions against an automatic strikeout of a claimant who had failed to pay the trial fee on time.

This was an appeal against a decision of the Central London County Court, which is still notionally open, but performing barely any better than the 90 County Courts closed since 2010, and where the loss of the trial date was effectively caused by the court staff.

Consequently, it should not be treated as meaning that such failure to pay the trial fee will always be treated so lightly, although the decision does disagree with that in

Hyslop v 38/41 CHG Residents Company Limited [2018] EWHC 3893 (QB)

where the High Court overturned the trial judge’s decision to accept an undertaking from the claimant’s solicitor to pay the fee and to allow the trial to proceed.

 

Here the High Court said:

 

“If the county court had heard the application shortly before or at the trial, I cannot conceive that if a solicitor’s undertaking had been given to pay the trial fee, relief would have been refused…”

 

So, there are two recent High Court decisions strongly disagreeing with one another, as that was precisely what happened in Hyslop – the Circuit Judge accepted the solicitor’s undertaking, but the High Court overruled that decision on appeal.

 

See my blog  – COURT FEE REMISSION .

 

Here, the court fee was due on 13 August 2018 in relation to a trial due to commence on 10 September 2018 and on 20 August 2018 the claimant’s solicitors realised their error in not paying the fee, and the individual solicitor conferred with his partners on 21 August 2018 and issued an application on 22 August 2018 for relief from the sanction of automatic strikeout.

The solicitor asked for a telephone hearing and pointed out the imminent trial date.

 

Paragraph 6 of the judgment here, gives a flavour of Central London County Court:

 

“The County Court at Central London did not list the hearing as requested. On 6 September, when the appellant’s solicitors made enquiry as to what was happening, they were informed by the court that the application would be heard on the first open date after seven days, but that no order had been made adjourning the trial. It appears therefore that in this case the trial had not been removed from the list as a result of the automatic strikeout that had occurred. This indeed was acknowledged in the judgment in the lower court. The trial date was in fact vacated by the court on the following day, Friday 7 September, but the application for relief against sanctions was not heard until 4 October 2018, by HHJ Roberts.”

 

The judge refused relief, holding that a CPR 3.7A(1)(vii) provides for automatic strikeout if the trial fee is not paid, it was not open to the claimant to argue that is was disproportionate to refuse relief, or that the sanction was disproportionate.

The judge also regarded the loss of the trial date as important and held that the application was not made promptly.

 

Here the court said:

 

“10. In my judgment the Judge misdirected himself in saying that the appellant could not rely on the criterion of disproportionality in relation to the sanction. In paragraph 13 of his judgment, he had recorded the appellant’s submission that it would be disproportionate not to grant relief from sanctions for an inadvertent failure. It seems to me clear that in the paragraph of his judgment that I have just read, the Judge is not referring to whether or not the rule itself is disproportionate in imposing a sanction of automatic strikeout, but is referring to the argument as to whether or not it would be disproportionate to refuse relief.

11. The test, when one reaches the third stage of the Denton v White analysis, is whether it is just in all the circumstances to grant relief, and therefore proportionality of the sanction, as compared with the effect of the breach and the consequences of refusing it, must lie at the heart of the analysis. It is inevitably harder for an applicant to say that refusing relief would be disproportionate to the breach where the breach is a serious breach and is unexplained, but the court must assess the justice, including the proportionality, of refusing or granting relief in all the circumstances of the case. It appears to me that the Judge did not appropriately consider the proportionality of the consequences of refusing relief to the nature of the breach because he considered that it was not open to the appellant to argue about proportionality.

12. I also consider that the Judge was wrong in principle to hold against the appellant as strongly as he did the fact that the trial date was lost. In a busy court centre, it may well happen that when an automatic strikeout occurs, a case is removed from the list, the hearing vacated, and another case takes its place. In those circumstances the trial date may well be lost, but the Judge did not say that that was what happened in this case, and indeed it is clear that that did not happen because the appellant’s solicitors were told the contrary on 6 September. The case was only removed from the list on 7 September, when the parties were ready for a trial and were seeking to know whether the trial and the application would be heard.

13. The application for relief was issued nearly three weeks before the trial. It identified the trial date, and asked for a telephone hearing. Although the word “urgent” was not used on the face of the application, the purpose of indicating the trial date is so that the court is able to see how soon an application must be heard, and whether it should be heard by the trial judge, either in advance of or at the trial itself. While acknowledging that court staff as well as judges are very hard-pressed and that it may not always be possible to process applications as swiftly as is desirable, that matter should not be held against litigants.

14. If the trial had not been vacated, as was the case, it ought to have been possible to list either a thirty-minute telephone hearing in advance of the trial date, or alternatively to have the matter heard before the trial judge, either in the week before or at the start of the trial. In these circumstances, in my judgment, that should have happened. Had that been done, the trial date would not have been lost. Mr Clark for the respondent acknowledges that if the application had been heard in the week before the trial, or even at the start of the trial, he could not sensibly have opposed it. I consider that concession to be properly made, and it casts particular light on what it was just to do on the facts of this case.

15. Thus, although the failure to pay the trial fee contributed to the loss of the trial date, in that it provided the opportunity for the trial date to be lost, on the facts of this particular case, it was not the cause of the trial being derailed. In view of what I have said about the judge’s approach, it is clear that the exercise of his discretion was legally flawed. In those circumstances it is appropriate for this court to exercise the discretion afresh, as both parties agree.”

 

The fact that the claimant could bring another claim or sue his solicitors meant that even more court resources would be used:

 

“22. If the county court had heard the application shortly before or at the trial, I cannot conceive that if a solicitor’s undertaking had been given to pay the trial fee, relief would have been refused, though no doubt relief would have been granted on terms as to the costs of the application and any costs wasted. Those costs would have been significantly less than the budgeted costs of the whole claim. The fact that the application was heard at a time after the trial date had passed is not the fault of the appellant, for reasons that I have given. So, the application should not be judged as one where the breach caused the loss of the trial date.

23. Ultimately, in my judgment, despite the fact that a moderately serious breach was committed without mitigating circumstances, justice is better done in this case by enabling the current action to proceed to a trial, rather than requiring the appellant to start new proceedings for his claim, or alternatively a claim for negligence against the solicitors, or possibly both. Paying all the costs of the current claim, and incurring the cost of funding two new actions, would in my judgment be disproportionate to the seriousness of the breach and any harm done to the administration of justice or to the respondent that is attributable to the breach, as opposed to being attributable to the court’s failure to list the application urgently. So far as prejudice to the respondent is concerned, the respondent would be equally troubled by a new claim that the appellant would be able to bring.

24. Of course in general terms defaulting litigants who have to apply for relief against sanctions may not find themselves in a position where the trial date can be saved. A busy court centre may well vacate the hearing date when it is aware that the trial fee has not been paid. In those circumstances a breach will have caused the loss of the trial date, and that will be a significant factor, as the Judge in the lower court considered it to be, in the exercise of discretion. I do not by granting relief in this case suggest that a prompt application will always be liable to result in relief being granted. In any given case, there may be circumstances that make it unjust to grant relief, particularly if the applicant has previously been in serious breach of directions or rules of the court. Litigants and solicitors are therefore well advised to take no risk with the late payment of court fees. For the reasons I have given, however, I will allow the appeal in this case, with the consequence that relief against sanctions is granted to the appellant. I will hear counsel now on the terms on which such relief should be granted.”

 

Comment

An outstandingly sensible, just and pragmatic decision which one hopes marks a sea-change in the judiciary’s approach to inadvertent and relatively harmless errors.

We are all sick of a situation where County Courts can delay for weeks or months, and where orders are sent out ordering solicitors to do things several weeks earlier, but where a solicitor, and client, can be hammered for a few days inadvertent delay.

I do not normally name judges, but I will make an exception – well done Mr Justice Fancourt!

Written by kerryunderwood

December 17, 2019 at 7:27 am

Posted in Uncategorized

EMPLOYMENT CLAIMS AND DAMAGES-BASED AGREEMENTS AND CONDITIONAL FEE AGREEMENTS ETC.: SOME ISSUES

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

The Damages-Based Agreements Regulations 2013 are poorly worded and are made under section 58AA(4) of the Courts and Legal Services Act 1990 and section 58AA(3) of that Act provides:

 

“(3) For the purposes of this section—

(a) a damages-based agreement is an agreement between a person providing advocacy services, litigation services or claims management services and the recipient of those services which provides that—

(i) the recipient is to make a payment to the person providing the services if the recipient obtains a specified financial benefit in connection with the matter in relation to which the services are provided, and

(ii) the amount of that payment is to be determined by reference to the amount of the financial benefit obtained.”

 

On the face of it that is very broad indeed and covers all Conditional Fee Agreements and all Contingency Fee Agreements. That view is reinforced by the fact that Regulation 1(4) of the Regulations specifically excludes from the Regulations, Contingency Fee Agreements made under section 57 of the Solicitors Act 1974, but nevertheless still refers to them as Damages-Based Agreements.

That exception, which thus allows straightforward Contingency Fee Agreements outside the scope of the Regulations, is itself subject to an exception in relation to employment matters.

 

The relevant wording is regulation 1(6) which reads:

 

6.  Where these Regulations relate to an employment matter, they apply to all damages-based agreements signed on or after the date on which these Regulations come into force.”

 

Thus, any type of contingent or conditional fee arrangement in an employment matter is subject to the Regulations.

Thus, the issue is what is classed as an employment matter.

 

Regulation 1(2) is a definition section and says:

 

““employment matter” means a matter that is, or could become, the subject of proceedings before an employment tribunal;”

 

That is clearly intended to cover pre-issue work in a potential Employment Tribunal matter and Employment Tribunals have exclusive jurisdiction over a whole range of employment matters, including unfair dismissal and all forms of discrimination in employment.

In relation to any employment matter that can only be decided in the High Court/County Court – and off hand I cannot think of any – then there would be no problem as an employment matter over which an Employment Tribunal has no jurisdictions could not be, or become, the subject of proceedings before an Employment Tribunal.

That leaves the issue of claims which could be brought either in the Employment Tribunal or the High Court/County Court, and the obvious example is breach of contract claims.

Pre-issue, such a matter could clearly become the subject of proceedings before an Employment Tribunal, and therefore, in my view, could not be subject to the Underwoods Method of a Pre-Action Contingency Agreement and Bridging Agreement and Conditional Fee Agreement.

Once a matter is actually issued in the County Court, then obviously it cannot be the subject of Employment Tribunal proceedings, on general procedural grounds, but specifically following the rule in

Henderson v Henderson (1843) 3 Hare 100, 67 ER 313.

Consequently, an issued County Court employment matter can be the subject of a Conditional Fee Agreement.

My view is that the strict legal position is that pre-issue in an employment matter that does in fact become a High Court/ County Court matter, but could become the subject of proceedings before an Employment Tribunal, you should indeed have a Damages-Based Agreement.

However, if you have a Conditional Fee Agreement from the outset, and the matter is then issued in the County Court, the Conditional Fee Agreement can be effective from the very beginning of the case, and by this stage it is a case which could not become the subject of proceedings before an Employment Tribunal, and would therefore be lawful and enforceable, both in relation to between the parties’ costs and against the client for unrecovered solicitor and own client costs, and the success fee.

Clearly, in such case, you cannot have a section 57 Contingency Fee Agreement, as the regulations specifically prohibit that.

The potential problem is that if you have a Conditional Fee Agreement, satisfying the rules in relation to Conditional Fee Agreements, but not complying with the stricter and more technical Damages-Based Agreements Regulations, and the matter settles pre-issue, then arguably the agreement is void as the matter is still one that “ is, or could become the subject to proceedings before an Employment Tribunal”.

The safest course of action is to have a Damages-Based Agreement and a Conditional Fee Agreement from day one with the Damages-Based Agreement dropping away only if the matter is issued in a forum other than an Employment Tribunal.

There is a further twist to this.

An Employment Tribunal cannot award more than £25,000 for breach of contract, and therefore, on the face it, a higher claim could not “become the subject of proceedings before an Employment Tribunal”.

However, it is well established that Employment Tribunals have jurisdiction to hear breach of contract claims for any amount, but the amount of damages that an Employment Tribunal can award is limited to £25,000.

Thus, even though a claim for say £250,000 damages for breach of contract in an employment claim is extremely unlikely to become the subject of proceedings before an Employment Tribunal, it could.

Consequently, it is caught.

There is an argument that all Conditional Fee Agreements are caught by the Damages-Based Regulations given the definition in section 58AA(3)(ii) of the Courts and Legal Services Act 1990, but it is almost inconceivable that a court would hold a type of agreement sanctioned by Parliament to be void.

Supposing a breach of contract claim has not yet been issued but is outside the extremely strict three month less a day time limit for issuing in the Employment Tribunal?

Surely, such a matter can then become the subject of a Contingency Fee Agreement/Conditional Fee Agreement, rather than a Damages-Based Agreement, as it is not now a matter “that is, or could become, the subject of proceedings before an Employment Tribunal;”.

 

What a mess!

Written by kerryunderwood

December 12, 2019 at 7:41 am

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CONDITIONAL FEE AGREEMENTS ARE CONTENTIOUS BUSINESS AGREEMENTS: YOU CAN’T JUST SUE ON THEM

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Healys LLP v Partridge and another [2019] EWHC 2471

the Chancery Division of the High Court held that a Conditional Fee Agreement was a Contentious Business Agreement to which section 61 of the Solicitors Act 1974 applied and consequently Part 8 proceedings, rather than Part 7 proceedings, should have been issued to enforce the agreement.

The claimant firm of solicitors and the defendants were in dispute about the payment of the solicitors’ fees under a Conditional Fee Agreement and the solicitors issued proceedings using the Part 7 procedure but for money due under the Conditional Fee Agreement.

Section 61 of the Solicitors Act 1974 provides that a Contentious Business Agreement does not give rise to a cause of action capable of founding a claim for costs, but rather such an agreement must first be submitted for determination by the court as to whether it is fair and reasonable.

If the court finds that the agreement is fair and reasonable, then it can be enforced, and if not then the matter goes to a detailed costs assessment.

As an application for such a determination is for an order under Part III of the Solicitors Act 1974, it must be made either under Part 8, in existing proceedings, or under Part 23 – see CPR 67.3(2).

Here the court found that the Conditional Fee Agreement was a Contentious Business Agreement as it met the definition for such agreements contained in section 59(1) of the Solicitors Act 1974 as it was an agreement as to the solicitors’ remuneration, and set out an hourly rate, and so the remuneration was set by reference to an hourly rate.

The fact that a Conditional Fee Agreement might provide for reduced or no fees in the event of failure was irrelevant.

Consequently, the action should continue as though it had been commenced under Part 8.

This is a difficult area, and different courts have taken different views at different times.

Here the court noted that the Court of Appeal in

Hollins v Russell [2003] EWCA Civ 718

had stated that a Conditional Fee Agreement was in principle a Contentious Business Agreement for the purposes of Part III, but the Law Society’s model form of Conditional Fee Agreement expressly provides that it is not a Contentious Business Agreement.

The court here accepted that not every Conditional Fee Agreement will be a Contentious Business Agreement.

That was very much the view taken by the court in

Addleshaw Goddard LLP v Wood and Hellard [2015] EWHC B12 (Costs).

In

Vilvarajah v West London Law Ltd [2017] EWHC B23 (Costs)

the court held that the Conditional Fee Agreement there was a Contentious Business Agreement and set it aside pursuant to section 61 as being unfair and unreasonable.

– See my blog – NO SEE NO FEE? IS CFA VOIDABLE IF CLIENT NOT SEEN?

In relation to the Law Society Model Conditional Fee Agreement, and its statement that the agreement is not a Contentious Business Agreement, which also appears in the Underwoods Model Conditional Fee Agreement, the court had this to say:

 

“38. That does not of course necessarily mean that every CFA will be a contentious business agreement for the purposes of Part III of the 1974 Act. I note, for example, that the Law Society’s model form CFA for personal injury and clinical negligence cases contains a specific clause providing that the agreement is not a contentious business agreement within the terms of the 1974 Act. Without expressing any view on the construction and effect of agreements containing a clause of that nature, I note that the present CFA contained no such clause, nor anything else to suggest that it should fall outside the scope of the s. 59 definition.

 

It is trite law that simply giving an agreement a particular name does not affect the legal position, and therefore the position now seems to be that all Conditional Fee Agreements are in fact Contentious Business Agreements.

Elsewhere I have written about the fact that Conditional Fee Agreements where the fee is capped by reference to damages, as is required by law in relation to personal injury matters, appears to be caught by the Damages-Based Agreements Regulations as section 58AA(iii) apply to cases where it “is to be determined by reference to the amount of the financial benefit obtained”.

 

Comment

The whole issue of Conditional Fee Agreements, Contingency Fee Agreements, Damages-Based Agreements and Contentious Business Agreements, and indeed the Solicitors Act 1974 generally is a complete and utter mess that urgently requires codification.

This decision has potential serious ramifications for solicitors, in that they cannot sue for costs incurred under a Conditional Fee Agreement without first submitting the bill to the court for it to be determined whether the agreement is fair and reasonable.

It also means that old-fashioned hourly rate retainers are caught if they cover litigation, which means that no solicitor can sue on a bill for litigation services if charging by the hour.

Written by kerryunderwood

December 11, 2019 at 8:37 am

Posted in Uncategorized

DAMAGES-BASED AGREEMENTS: FUNDERS AND CLAIMS MANAGEMENT SERVICES

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Meadowside Building Developments Ltd (In Liquidation) v 12-18 Hill Street Management Co Ltd [2019] EWHC 2651 (TCC) (10 October 2019)

the Technology and Construction Court, part of the Queen’s Bench Division of the High Court, held that a funding arrangement was in fact a Damages-Based Agreement subject to the Damages-Based Agreements Regulations 2013, but as it failed to comply with those Regulations, it was champertous and unenforceable.

This is a decision that should send shudders through the litigation funding industry.

The correctness of a key part of this decision is open to doubt as, at paragraph 97, the court appears to accept that the mere providing of financial assistance amounts to “claims management services”, thus triggering the Damages-Based Agreements Regulations.

That argument was strongly rejected by the Competition Appeal Tribunal in

UK Trucks Claim Limited v Fiat Chrysler Automobiles N.V. and others and DAF Trucks NV and others and Road Haulage Association Limited v MAN SE and others and Daimler AG [2019] CAT 26 .

It is true that here the court held that the funder was supplying other services as well, which may have brought it within the definition of a claims management service provider in any event.

The court also held that the funder may have been providing litigation services, but in view of its finding that it was providing claims management services, it did not need to deal with that point.

The relevant statutory provision is section 58AA of the Courts and Legal Services Act 1990, which on its face is extremely broad, catching any case where the amount of the payment to the provider of advocacy services, litigation services or claims management services “is to be determined by reference to the amount of the financial benefit obtained”.

It was accepted here that the funder’s fee was determined by reference to the amount of the financial benefit obtained and therefore if it was providing prescribed services, then the funding arrangement was caught by the Damages-Based Agreements Regulations 2013, made under the Courts and Legal Services Act 1990.

It was also accepted that the Regulations apply to adjudication and arbitration proceedings.

At paragraphs 94 to 96, the court here set out the tortuous provisions in relation to the definition of “claims management services”.

 

“94. The principal dispute between the parties focussed on whether Pythagoras could be regarded as providing ‘claims management services‘. The CLSA 1990 was amended most recently, from 1 April 2019, by the Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018/1253, which had the following relevant effect:

(1) The version of s. 58AA(7) in force prior to 1 April 2019 stated that “claims management services” has the same meaning as in Part 2 of the Compensation Act 2006 (see section 4(2) of that Act).”

(2) The current version of s. 58AA(7) states that “”claims management services” has the same meaning as in [the Financial Services and Markets Act 2000 (see section 419A of that Act)].”

95. The Compensation Act 2006 provided in s. 4(2)(b)-(c) (now repealed):

“(b) “claims management services” means advice or other services in relation to the making of a claim,

(c) “claim” means a claim for compensation, restitution, repayment or any other remedy or relief in respect of loss or damage or in respect of an obligation, whether the claim is made or could be made–

(i) by way of legal proceedings,

(ii) in accordance with a scheme of regulation (whether voluntary or compulsory), or

(iii) in pursuance of a voluntary undertaking…

96. The approach under s. 419A of the Financial Services and Markets Act 2000 (‘FSMA 2000’) is effectively the same, save that the words “other services” are now given their own further definition:

“(1) In this Act “claims management services” means advice or other services in relation to the making of a claim.

(2) In subsection (1) “other services” includes—

(a) financial services or assistance,

(b) legal representation,

(c) referring or introducing one person to another, and

(d) making inquiries,

but giving, or preparing to give, evidence (whether or not expert evidence) is not, by itself, a claims management service.

(3) In this section “claim” means a claim for compensation, restitution, repayment or any

other remedy or relief in respect of loss or damage or in respect of an obligation, whether the claim is made or could be made—

(a) by way of legal proceedings,

(b) in accordance with a scheme of regulation (whether voluntary or compulsory), or

(c) in pursuance of a voluntary undertaking.”

 

On the facts, the court found that the funding arrangement was caught by the Regulations as the funder was providing claims management services.

The Regulations impose a 50% cap on any charge in general civil proceedings (25% in personal injury matters and 35% in employment matters).

The funder refused to disclose the amount and so the court inferred that it was above 50% and thus illegal and unenforceable.

Consequently, it was champertous and contrary to public policy:

“A champertous agreement will as a rule of public policy render a contract unenforceable”. (Paragraph 109).

 

On the public policy issue the court said:

 

“112. Mr Graham-Dixon contends that there is a ‘high risk’ of champerty where a funder with no pre-existing interest in a claim obtains control of proceedings and will recover more than 50%. This is because, through statutory regulation, parliament has seen fit to regularise the types of agreement which might otherwise have been regarded at common law as champertous, but in doing so, have expressly limited the proportion of recovery to which the service provider is entitled to 50%.

113. This conclusion is a justifiable one and in accordance with the approach of the Court of Appeal in Factortame as set out in paragraph 36 and 58 quoted above. Indeed, on the basis of Awwadit would seem that it is not open to this Court to conclude that an agreement caught by the DBAR 2013 and which is non-compliant with those Regulations is nevertheless enforceable, in circumstances where parliament has legislated that it is unenforceable. It is not for the court to supplant parliament’s view of what public policy dictates in this arena with any view of its own. The only logical conclusion to be derived from its unenforceablity is that it is contrary to public policy and, in the eyes of the common law insofar as it must reflect public policy as developed, champertous. In light of this, it is not necessary for me to consider further a number of the authorities relating to cases in which funding agreements, (which predated the DBAR 2013) relied upon by Mr Graham-Dixon insofar as their purely relate to the question of champerty, rather than abuse of process.

 

Comment

On its face the Courts and Legal Services Act 1990, and therefore the Damages-Based Agreements Regulations, capture funding arrangements, conditional fee arrangements where the total charge to the client is capped, and indeed all other contingent and conditional arrangements whereby the fee is determined by reference to “the amount of the financial benefit obtained”.

Out and out Contingency Fee Agreements under section 57 of the Solicitors Act 1974 are not caught because they are specifically exempted by the Damages-Based Agreements Regulations 2013 themselves.

Of course in personal injury Conditional Fee Agreements, which make up the vast majority of such agreements, Parliament has stated that the success fee cannot exceed 25% of damages, and therefore that is clearly a fee which is determined by reference to the amount of the financial benefit obtained.

On the face of it that makes any such agreement caught by the much more stringent and technical Damages-Based Agreements Regulations 2013.

Thus, it is arguable, that a Conditional Fee Agreement without a success fee, that is with a normal hourly rate where the contingent element is winning or losing, and where the fee is unaffected by the amount of the financial benefit obtained is not caught by the Regulations, but one where there is a success fee capped, and therefore determined, by reference to the amount of the financial benefit obtained is indeed caught by the Damages-Based Agreements Regulations 2013.

This whole area, that is Contingency Fee Agreements, Conditional Fee Agreements, Damages-Based Agreements, Litigation Funding Agreements, as well as the whole issues of champerty and maintenance need urgent attention.

Everything should be brought together in one statute – maybe the Legal Funding and Costs Act.

Written by kerryunderwood

December 11, 2019 at 7:26 am

Posted in Uncategorized

INDEMNITY COSTS: HIGH COURT REVIEW OF PRINCIPLES AND RELEVANT CASE LAW

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Suez Fortune Investments Ltd & Anor v Talbot Underwriting Ltd & Ors [2019] EWHC 3300 (Comm)

the Business and Property Courts (Commercial Court) part of the Queen’s Bench Division reviewed the principles and case law relating to indemnity costs, and in particular considered the circumstances in which continuing with a weak case should lead to an indemnity costs order.

Written by kerryunderwood

December 10, 2019 at 7:17 am

Posted in Uncategorized

PART 36: 8% APPROPRIATE INTEREST RATE SAYS HIGH COURT

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Kivells Ltd v Torridge District Council [2019] EWHC 3210 (TCC)

the Technology and Construction Court, part of the High Court, held that where a claimant had matched or beaten its own Part 36 offer the appropriate rate of interest on the judgment sum and the indemnity costs under the court’s discretion in CPR 36.17(4) is 8%, that being the judgment rate.

Shortly after this decision the Queen’s Bench Division of the High Court upheld a trial judge’s decision to award interest at 10% above base rate where the claimant had beaten its own Part 36 offer – see my blog

PART 36: HIGH COURT AWARDS 10% ABOVE BASE

 

I now quote from the Kivells case:

 

“18. In my judgment the appropriate rate of interest 8% which matches the judgment rate of interest. To the extent one can apply analysis and logic to a discretionary figure, I am influenced in coming to this conclusion by the thought that the claimant should be entitled to be treated as if it had been in the position of a judgment creditor now that it has more than vindicated itself by the recovery under my judgment when compared to what was advantageously offered to the defendant by the Part 36 offer.

19.The essential thrust of CPR 36.17(4), in such circumstances and assuming normality prevails, is to put the rejected offeror into a different, superior class of judgment creditor in relation to the period beginning with the expiry of his offer. And the essential basis for that can be said to be the reflection, in hindsight, that the litigation should by then have been concluded with recognition of his entitlement. It is clear that the claimant may be awarded interest at a rate which proves to be more than compensatory. In modern times it might be said that judgment rate of 8% produces, at least in some cases, an element of over-compensation. Whether or not that is so, I have concluded in this case that it is right to award that rate to the claimant for the period of its superior entitlement as if it was then entitled under a judgment rather than simply looking to the court’s discretion for the recovery of a less generous commercial or compensatory rate over the pre-judgment period. Therefore, Mr De Waal, I am going to say it is interest at the rate of 8% per annum both under (a) and (c).

Written by kerryunderwood

December 10, 2019 at 7:13 am

Posted in Uncategorized

COURT FEE REMISSION

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This piece, in slightly different form, first appeared on the Practical Law Dispute Resolution Blog.

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

This piece does not deal with Court fees themselves, but rather the principles and practices of court fee remissions and recoverability etc. and the process of seeking remission.

 

COURT FEE REMISSION AND RECOVERABILITY

A claimant who could have applied for remission of the court fee does not do so and wins the case.

Is the losing defendant liable for that court fee, or can it successfully argue that it was unreasonably and/or unnecessarily incurred?

No or Yes, depending upon which court you are in.

In

Stoney v Allianz Insurance Plc Case No: E14LV817, Liverpool County Court 7 November 2019

the court said no, holding that the fee was unreasonably incurred as the claimant may have been entitled to fee remission, that is he would not have had to pay the fee.

The judge accepted that this meant that a necessarily incurred court fee, caused by the negligence of the insured, would be borne by the state and not the insurance company, but said that that was a matter for Parliament or the Rules Committee.

In

Cook v Malcolm Nicholls Limited Case No: B57YP191, Coventry County Court 11 April 2019

the court said yes:

 

“I take the view that the court fee is the court fee. That has got to be paid.”

 

The latest addition to case law, again at County Court level, is

 

Ivanoy v Lubble (Central London County Court 17th January 2020)

 

where the court said:

 

“…. I am satisfied that it is not unreasonable for the Claimant to pass on the hearing fee to the Defendant”.

 

Comment

It would be a very simple matter indeed for the Civil Procedure Rules to say either:

 

“A successful claimant shall recover any court fee paid, whether or not that party could have sought remission of that fee” 

or

“A defendant shall not be liable for a court fee incurred by a party who could have successfully claimed remission of that fee.”

 

Don’t hold your breath.

 

In Practice

In practice solicitors should always check to see if their client qualifies for court fee remission. This avoids the problem, and also assists with cash-flow if it is the practice of the firm to pay the fee.

It is also a useful lever for solicitors to get the fee out of the client upfront; if the client does not qualify for remission, then that is a powerful argument that the client could, and should, pay upfront.

It follows, as night follows day,that a solicitor who fails to advise a client about fee remission, and then fails to recover the fee from the other side in the event of a win, will have to fund the fee themselves, rather than the client taking the hit for the solicitor’s negligence.

It is also inadequate professional service.

 

DOUBLE CHARGING: A COURT RIP-OFF 

An application is made to the court and a fee of £255 is paid. The matter is resolved by way of a Consent Order/Tomlin Order, which is filed with the court, which then charges £100, thus effectively charging twice.

 

COURT FEES AND GENERAL CIVIL RESTRAINT ORDERS

In

Chief Constable of Avon and Somerset v Gray [2019] EWCA Civ 1675 (11 October 2019)

the Court of Appeal allowed an appeal and set aside the High Court’s refusal to extend a General Civil Restraint Order.

It held that the High Court was wrong to conclude that the court fee payable under Practice Direction 3C.4.2- General Civil Restraint Order application fee- represented an absolute or effective bar to litigating which justified not extending the General Civil Restraint Order despite his finding that the respondent was very likely to bring civil claims, including unmeritorious ones, if the General Civil Restraint Order was lifted.

The Court of Appeal retrospectively extended the General Civil Restraint Order from the date of the High Court application.

The Court of Appeal considered that although the current fee of £55 may be a significant sum for someone in receipt of benefits, it was not open to the court to hold that the fee represented a bar to litigation without evidence showing that the individual would be unable to access that amount of money by borrowing, support from friends or family, or obtaining legal aid or legal representation subject to a damages based agreement or conditional fee agreement.

The Court of Appeal also noted that for a meritorious claim, the General Civil Restraint Order application fee is returnable, and therefore described this as a “cash-flow” problem.

It considered that the fact that the fee would not be returned in an unmeritorious claim, represented a legitimate deterrent to making such claims.

It should be noted that there is no fee remission scheme in relation to vexatious litigants, but rather a vexatious litigant in these circumstances has to pay the full fee but it is then refunded if the application is successful.

That is the effect of Paragraph 19 of Schedule 2 of the Civil Proceedings Fees Order 2008 and the court said this:

 

“32. In my view, the relevant language of these regulations is clear. There is a distinction between “remission” and the refunding of a fee. Subject to other provisions, an impecunious litigant can apply for remission of the fee under paragraph 15 of Schedule 2 and, upon making the application, the date for payment of the fee is disapplied. To the extent that the application for remission succeeds, that fee never becomes payable. However, where a restraint order is in force against such an individual, then the prescribed fee “is payable in full”, and it follows the individual cannot make the application for remission. It also follows that the date for payment cannot be “disapplied” and therefore the payment must be made before the relevant issue or step in the action. Paragraph 19(3) simply means that, if the relevant individual has a reasonable claim and is granted permission then they will be put back into the position they would have been had remission of the fee been open to them.

33. In my view, the intention of these provisions is obvious: the requirement to pay the fee at the initiation of action must be taken to be part of the discipline imposed on vexatious litigants.”

 

COURT FEES, PART 8 APPLICATIONS AND INFANT APPROVAL

The fee on a Part 8 application for infant approval is £308 and not the fee payable on the issue of a Part 7 claim, or a Stage 3 portal claim.

Ministry of Justice guidance saying that the full fee applies to all Part 8 claims is wrong; it only applies to Stage 3 claims.

The court has itself suggested that:

You may, in order to assist the court, specify that the Claim is for an infant settlement, in bold print.”

You may indeed.

I am grateful to Gordon Exall and his outstanding blog – Civil Litigation Brief – for the information in this piece. Here is the link to the longer post on this subject. The Correct Fee on a Part 8 Application: Don’t Let The Court Staff Make You Hand Over Money For Nothing

 

STAGE 3 ISSUE FEES

I am grateful to Gordon Exall and his blog Civil Litigation Brief and to Jon Heath of Levins in Liverpool for information contained in this piece.

There has been disagreement in different courts as to the correct fee for issuing a Stage 3 claim, that is the last part of the portal process, which everyone accepts involves issuing proceedings.

One view is that Stage 3 claims, apart from infant approval settlements, are proceedings to recover a sum of money and thus the fee paid should be the same as for a Part 7 claim of the same value.

Some courts have adopted that view whereas others have treated the claim as “proceedings for any other remedy” which involves a fee of £308.

In claims with a value of not more than £5,000 then the Part 7 fee is £455.

The “proceedings for any other remedy” fee is a flat fee of £308 whatever the value of the claim.

The Ministry of Justice has now confirmed that the Part 7 approach is the correct one in its view.

 

TRIAL MUST BE STOPPED IF FEE NOT PAID

In 

Hyslop v 38/41 CHG Residents Company Limited [2018] EWHC 3893 (QB)

a High Court Judge held, on appeal, that where a claimant had not paid the trial fee, striking out was automatic, even if the fact only came to light at the trial, and the solicitor then paid the fee.

The claimant should have applied for relief from sanctions and it was not for the defendant to take the point, or apply for an unless order.

At trial the judge accepted an undertaking from the claimant’s solicitor to pay the fee the following day and allowed the trial to proceed.

Here the High Court, on appeal, sent the matter back for retrial by a different judge, with the claimant required to make a formal application for relief from sanction.

 

Comment

How can this possibly comply with the overriding objective?

The trial judge said:

 

“I am tempted to say, it is almost absurd for the parties to get ready for a trial, turn up for a trial, two days of court hearing time being allocated to the trial and then the judge sending everybody away because a fee has not been paid which now will be paid.”

 

While I am at it, how about HMCTS joining the modern world and setting up an account system so that issue fees, application fees and trial fees etc. are automatically deducted from the solicitors’ account whenever a fee-bearing activity takes place where that firm is on the record?

 

COURT FEE REMISSION PROCESS

An application for help with fees, that is to avoid paying a court or tribunal fee altogether, or getting a reduction on the normal fee, is made on Form EX160 – Apply for Help with Fees. The process for applying online is:-

  • court users enter their details and check them before submitting the application;
  • court users receive an application reference number that needs to be written on their Court/Tribunal claim or application form;
  • if the application reference number is not written on the Court/Tribunal claim or application form, staff will not be able to process the application for help with fees;
  • the applicant receives a confirmation email from the Court/Tribunal containing the application reference number;
  • the Court/Tribunal contacts the applicant to let them know whether the application was successful or not, and if not if there is any additional information required;
  • there is no need to provide any paper evidence unless the court or tribunal specifically asks for it.

In June 2016 HM Courts and Tribunals Service updated its guide on how to apply for help with fees and that 20 page publication is on Form EX160A.

 

ELIGIBILITY

To be eligible for a fee remission the Court user must pass two tests, the disposable capital test and the gross monthly income test, and fill out Form EX160. Only the person who has to pay the court or tribunal fee can make a fee remission application. However, there are two exceptions to this rule:

 

  • applications to the Court of Protection on behalf of ‘P’ (a ‘person’ who lacks the capacity to make decisions); or
  • any person acting for or representing a child involved in legal action.

 

The guidance says:

Minors: If you are acting for or representing a child involved in court or tribunal proceedings, in your capacity as a Litigation Friend, parent or guardian, you can apply for a full or part remission using your own details.”

The fee remission scheme is based on two tests:-

 

  • Disposable capital test;
  • Gross monthly income test;

 

The Court user will have to pass both tests in order to be eligible for a fee remission.

 

DISPOSABLE CAPITAL TEST

In order to pass the Disposable capital test, this is the first test that must be passed, you must have a disposable capital of below the following thresholds and if you do then you will pass the disposable capital test and can continue to the gross monthly income test.

 

Court or tribunal fee Disposable capital threshold
Your court or tribunal fee is: You, and your partner’s disposable capital is less than:
Up to £1,000 £3,000
£1,001–£1,335 £4,000
£1,336–£1,665 £5,000
£1,666–£2,000 £6,000
£2,001–£2,330 £7,000
£2,331–£4,000 £8,000
£4,001–£5,000 £10,000
£5,001–£6,000 £12,000
£6,001–£7,000 £14,000
£7001 or more £16,000

 

For people 61 years or older there is a single disposable capital limit of £16,000, regardless of the amount of the court fee.

 

If you have disposable capital equal to or more than the relevant threshold you will not be eligible for a fee remission and will be required to pay the fee in full.

 

The Ministry of Justice states that disposable capital is:-

 

the value of savings, investments and so on which you and your partner (if you have one) have on the date the application is made. It does not include wages or benefits. However, if you are bringing proceedings with a contrary interest, do not include the value of your partner’s disposable capital, or any capital held jointly by you or your partner (for example, a joint savings account).”

 

Examples of disposable capital are as follows:-

  • capital held in any type of saving account(s); for example:
    • all ISAs;
    • fixed rate bonds
    • market linked investment bonds or savings; or
    • any other form of savings account.
  • any type of redundancy capital payment received;
  • stocks or shares;
  • any jointly held capital (where one or more parties have a financial interest in a disposable capital source);
  • second homes;
  • trust funds (where accessible), or any other fund available to you;
  • any type of disposable capital held outside the UK;
  • any type of capital financial product (for example, unit trusts, an OEICs/Open-Ended Investment Company, or derivatives

 

The following should not be included when calculating disposable capital:-

 

  • Bereavement Payment;
  • Self employed businesses – the capital value of your or (if you have one) your partner’s business;
  • Criminal Injuries Compensation Scheme;
  • First homes (the main property where you live);
  • Home contents (for example, furniture or clothing);
  • Independent Living Fund;
  • Insurance contracts – the cash value of (for example, life insurance);
  • Jobseeker’s Back to Work Bonus;
  • Lump sum payments made on illness, disability or death from insurance or endowment policies (all other insurance or endowment payments are considered);
  • Medical negligence or personal injury awards;
  • Personal or occupational pension schemes (the cash value of);
  • Student loans or student grants;
  • Sure Start Maternity Grants;
  • Tools and implements of trade (including vehicles used for business purposes);
  • Trust funds, and any other fund available, which you or (if you have one) your partner, cannot access or receive advances from;
  • Unfair dismissal awards;
  • Vehicles (for example, cars or vans) – the sale of which would leave you or your partner without transport

 

If you pass the disposable capital test then you can continue to the gross monthly income test which will also need to be passed in order to be eligible for a full or part remission.

However, if you do not pass this test, that is the disposable capital test, then you are not eligible for any fee remission and you do not need to consider the Gross monthly capital test.

 

GROSS MONTHLY INCOME TEST

There are two types of fee remission and you have to pass both tests in order to be eligible for a fee remission:-

  • Remission 1 – you will receive a full remission of a court or tribunal fee if you receive one of the following benefits:-
  • Income-based Jobseekser’s Allowance;
  • Income-related Employment and Support Allowance;
  • Income Support;
  • Universal Credit – with gross annual earnings of less than £6,000.00;
  • State Pension – Guarantee Credit;
  • Scottish Civil Legal Aid; or
  • Remission 2 – you will receive a full remission if your gross monthly income is below the following thresholds:-

 

Gross monthly income cap thresholds – full remissions:
Gross monthly income with: Single Couple
No children £1,085 £1,245
One child £1,330 £1,490
Two children £1,575 £1,735
£245 for each additional child

 

If your gross monthly income exceeds the above figures you may still receive a partial fee remission. For every £10 of income you have over the threshold set out in the above table, you will be required to pay £5 towards your court or tribunal fee. The court or tribunal will calculate whether you are required to pay a contribution towards the fee – known as a partial remission.

If your gross monthly income is over the below figures, or your expected contribution is higher than the fee required, you will not be eligible for a fee remission:

Gross monthly income cap thresholds – partial remissions:
Gross monthly income with: Single Couple
No children £5,085 £5,245
One child £5,330 £5,490
Two children £5,575 £5,735
£245 for each additional child

 

REFUNDS

A fee remission can be applied for before the case is issued or a refund can be applied for following payment of the court fee.

However, the time limit in which a refund of a court fee can be applied for is stated as within six months of paying the fee in Schedule 2 of The Civil Proceedings Fees Order 2008 and within three months of paying the fee on page 19 of the HM Courts & Tribunals Service’s own guidance on EX160.

Written by kerryunderwood

December 9, 2019 at 9:30 am

Posted in Uncategorized

OUT-OF-HOURS QUALIFYING FLOATING CHARGE HOLDER ADMINISTRATOR APPOINTMENT VALIDATED AND RESTRICTIONS ON OUT-OF-HOURS E-FILING CRITICIZED

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Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

 

In

Causer & Anor v All Star Leisure (Group) Ltd [2019] EWHC 3231 (Ch)

the Chancery Division of the High Court strongly criticised the 2017 and 2018 amendments to CPR Practice Direction 51O and Practice Direction – Insolvency Proceedings that appear intended to restrict the 24-hour e-filing system from being used to effect administrator appointments outside court hours.

The case involved an attempted and urgent appointment of an administrator over a parent company by a qualifying floating charge holder and the appointment was a pre-condition of a pre-packaged sale of the business of the group owned by the parent company.

This sale was ultimately effected half an hour after the appointment was confirmed in the e-filing system, but the court formally closed at 4pm and the appointment documents were uploaded at 4.18pm.

The court validated the appointment of the administrators, considering its out-of-hours nature to be a formal defect that was curable under rule 12.64 of the Insolvency (England and Wales) Rules 2016 (SI 2016/1024).

To this extent the decision is in line with

Re Skeggs Beef Limited (in administration) [2019] EWHC 2607 (Ch) .

However, the judge’s attitude — that ideally the e-filing system should be able to be used for out-of-hours administrator appointments — was more in line with

Wright and others v HMV Ecommerce Ltd and another [2019] EWHC 903

which Skeggs Beef itself distinguished.

The court noted that the business sale and job security of employees among other things were at risk if the administrators’ appointment was not valid.

It was an “apparent absurdity” that the 24-hour electronic filing system should only be authorised to be used within court hours when it came to administrator appointments.

The court examined the provisions of the Insolvency Act 1986 and the Insolvency Rules 2016 that relate to the filing of a notice of appointment of an administrator.

It found no legal reason why the CPR practice directions had been amended to exclude, on most readings, the out-of-hours appointment of administrators through the e-filing system.

The various potential policy reasons were also not compelling in its view and the court called for the CPR practice directions to be amended to remove the restrictions on out-of-hours appointments by e-filing.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

December 6, 2019 at 7:10 am

Posted in Uncategorized

QUALIFIED ONE-WAY COSTS SHIFTING AND MIXED CLAIMS

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These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Brown v Commissioner of Police of the Metropolis & Ors [2019] EWCA Civ 1724

the Court of Appeal held that a claimant could not rely on Qualified One-Way Costs Shifting automatically to avoid enforcement of adverse costs orders simply because one of the failed claims was for personal injury, which is QOCS protected.

The decision gives important guidance in relation to QOCS and mixed claims and in particular states that Practice Direction 44, paragraph 12.6, is wrong and “needs to be amended as soon as possible”.

The claimant brought various claims against the police, including breach of contract, misfeasance in public office, misuse of private information and personal injury.

The claim for damages for breach of contract was not pursued and the claim for misfeasance in public office was lost at trial, but the claimant won at trial on the claim for misuse of private information.

The personal injury claim was lost.

The police force had admitted liability in relation to breach of the Data Protection Act 1998 and the Human Rights Act 1998.

The claimant failed to beat the defendant’s Part 36 offer.

The claimant submitted that as her claims included a claim for damages for personal injury, it was QOCS protected and the trial judge agreed.

The police force appealed and its appeal was allowed by the High Court – [2018] EWHC 2046 (Admin).

The Court of Appeal rejected the claimant’s appeal, but it is not as simple as that.

The Court of Appeal held that the proper interpretation of CPR 44.16(2)(b) was clear; if the proceedings also involved “claims made by a claimant which are not claims for damages for personal injury”, the exception applied, causing the automatic QOCS protection to fall away and leaving costs in the discretion of the court.

For the exception, and therefore the disqualification of automatic QOCS protection to fall away, the personal injury and non-personal injury claims need not be separate and divisible, but must claim different types of loss.

QOCS protection only applies to personal injury damages claims but, as well as pain and suffering claims, these include claims for costs of medical treatment, adapting accommodation and all other claims consequential upon the injury, such as loss of earnings.

Property damage claims, such as vehicle repair or credit hire in road traffic accident claims are not consequential upon physical injury and thus are not automatically QOCS protected, and thus the costs are in the discretion of the court in such cases.

However, when exercising that discretion, the fact that QOCS applies to the personal injury claim “is the starting point, and possibly the finishing point too”.

If the proceedings can fairly be described overall as a personal injury claim then, unless the non-personal injury claims have exceptional features, such as gross exaggeration, the court’s exercise of its discretion should seek to achieve a cost neutral result.

Consequently, QOCS protection would still apply, on a discretionary basis, to most of the mixed claims described.

In so far as Practice Direction 44.12.6 suggests otherwise, it is wrong and needs amending.

 

“44.16

(1) Orders for costs made against the claimant may be enforced to the full extent of such orders with the permission of the court where the claim is found on the balance of probabilities to be fundamentally dishonest.

(2) Orders for costs made against the claimant may be enforced up to the full extent of such orders with the permission of the court, and to the extent that it considers just, where –

(a) the proceedings include a claim which is made for the financial benefit of a person other than the claimant or a dependant within the meaning of section 1(3) of the Fatal Accidents Act 1976 (other than a claim in respect of the gratuitous provision of care, earnings paid by an employer or medical expenses); or

(b) a claim is made for the benefit of the claimant other than a claim to which this Section applies.

(3) Where paragraph (2)(a) applies, the court may, subject to rule 46.2, make an order for costs against a person, other than the claimant, for whose financial benefit the whole or part of the claim was made.”

“16. Section 2 of Practice Direction 44 sets out some limited guidance in relation to QOCS. In respect of r.44.16 as a whole, paragraph 12.6 of the PD provides as follows:

 

“In proceedings to which rule 44.16 applies, the court will normally order the claimant or, as the case may be, the person for whose benefit a claim was made to pay costs notwithstanding that the aggregate amount in money terms of such orders exceeds the aggregate amount in money terms of any orders for damages, interest and costs made in favour of the claimant.””

 

In my book on the subject – Qualified One-Way Costs Shifting, Section 57 and Set-OffI was rather politer than the Court of Appeal simply stating that there was a “degree of contradiction” between CPR 44.16 and the Practice Direction 😊

 

Set-Off

It should be noted that although the Court of Appeal, correctly, refers to the result being cost neutral in the sense that the claimant should not have to pay more than the damages under the QOCS provisions, any costs awarded to the claimant can first be set-off against any costs due to the defendant, and this is under CPR 44.12, which is not part of the QOCS provisions, but is immediately before them and reads:

“(1) where a party entitled to costs is also liable to pay costs, the court may assess the costs which that party is liable to pay and either –

(a) set off the amount assessed against the amount the party is entitled to be paid and direct that party to pay the balance; or

(b) delay the issue of a certificate for the costs to which the party is entitled until the party has paid the amount which that party is liable to pay.”

Let us assume that the claimant is awarded £5,000 costs and £9,000 damages, but that there is also an order in favour of the defendant, for whatever reason, for example because it is a mixed claim as here, or because the claimant has failed to beat a Part 36 offer.

The defendant can first set-off all costs due to the claimant against the costs due to it, and can then attack the damages.

Thus, in this example, the maximum that the defendant could get by way of costs is £14,000, and not £9,000.

Written by kerryunderwood

December 5, 2019 at 7:30 am

Posted in Uncategorized

CPR 71 ORDER FOR EXAMINATION OF JUDGMENT DEBTOR AVAILABLE FOR COSTS ORDERS WHERE AMOUNT NOT YET DETERMINED

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

W Nagel (a firm) and another v Pluczenik and another [2019] EWHC 3126 (QB)

following costs orders made against the claimant and the defendant, the net position was that substantial costs were payable by the defendant to the claimant.

The claimant applied for an order under CPR 71 “Orders to obtain information from judgment debtors” against two officers of the defendant, incorporated outside England and Wales, to attend court for questioning about the defendant’s means both in respect of the outstanding part of the quantified money judgment and the costs orders.

The CPR 71 orders were served on the officers while they were visiting England and an oral hearing took place, but was adjourned part-heard.

The Court of Appeal dismissed the defendant’s appeal against the CPR 71 orders and made further costs orders against the defendant, who failed to attend the adjourned hearing.

The defendant subsequently settled all sums due by way of quantified orders for payment and accrued interest.

Following disagreements about the terms of the order made by the Master for the continuation of the CPR 71 examination, which were not minuted or sealed, she gave a reasoned judgment, finding that the defendant remained a judgment debtor for the purpose of CPR 71, even though the only part of the judgment outstanding was the unquantified costs liability, suggested to be in excess of £600,000.

The defendant’s appeal against the Master’s order was dismissed.

The High Court Judge held that CPR 71 allows a person to be compelled for examination as a “judgment debtor” even when the only outstanding parts of the judgment against them are costs orders for sums which have yet to be agreed or determined by assessment, so that payment for those sums has not yet fallen due.

The power to order a judgment debtor to attend court in CPR 71.2(1) is a single power, applicable to all types of judgment and order, and the amount of costs payable does not have to be determined before CPR 71 can be invoked.

The judge rejected the defendant’s contention that the Master had erred in continuing the CPR 71 procedure, finding that she had made a decision which was open to her in the exercise of her discretion and had given an impeccable judgment in support of it.

Written by kerryunderwood

December 4, 2019 at 6:55 am

Posted in Uncategorized

EMPLOYMENT: NO WITHOUT PREJUDICE OR LITIGATION PRIVILEGE FOR SETTLEMENT AGREEMENT OR EMAIL REFERRED TO IN IT

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

BGC Brokers LP and others v Tradition (UK) Ltd and others [2019] EWCA Civ 1937

the Court of Appeal dismissed an appeal against an order allowing inspection of a Settlement Agreement between the claimant and the third defendant.

The claimant was resisting inspection on the grounds of without prejudice privilege, or alternatively litigation privilege.

In the Settlement Agreement, the third defendant warranted that he had provided full and frank disclosure of the confidential information he had supplied to others, as set out in various documents listed in the agreement, including a particular email which was identified by subject matter, sender and recipient, time of sending and date.

The agreement also provided that the documents listed, including the email, retained without prejudice privilege, save that the parties could waive it in the event of breach of the agreement.

Several of the other defendants had applied for inspection of the unredacted Settlement Agreement and of the email, which they submitted was incorporated into the agreement by reference.

The court set out the principles re without prejudice privilege, holding that a Settlement Agreement, resulting from without prejudice negotiations is not covered by without prejudice privilege.

As the purpose of the Settlement Agreement was not to negotiate but to conclude a settlement of the dispute, it was not covered by without prejudice privilege, and as the email was incorporated into the agreement, it also ceased to be protected by without prejudice privilege.

Incorporating it changed its status from being inadmissible to being the legal foundation of a potential claim for breach of warranty.

Regarding litigation privilege, the court held that the purpose for which the earlier communications, including the email, were incorporated into the Settlement Agreement by the claimant was to obtain the benefit of the third defendant ‘s warranties and the ability to sue him if they were inaccurate.

This was a different purpose to the purpose of evidence gathering which had informed the making of the earlier communications, and the two purposes were not part of a “single wider purpose”.

Written by kerryunderwood

December 3, 2019 at 10:38 am

Posted in Uncategorized

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